Posts Tagged budget

– A proposal by the Governor of Iowa, Terry Branstad, to reduce the education budget by almost $413,000 will have larger ramifications. Education officials said yesterday that the cuts will cause the state to lose approximately $25.8 million in federal grants. To receive federal money, in many instances states must match a portion of the spending, so when a state makes cuts, it’s federal funding is reduced as well.

These federal losses include $11.2 million that the state usually collects to aid districts with reduced-price and free school lunches for deserving students. Local residents will have to pay higher taxes to cover the difference. Other options include raising the cost of meal plans for students, or making cuts to programs and services.

The Director of the Education Department, Jason Glass, has met with Gov. Branstad to resolve this issue before the Legislature faces it. Branstad’s recommendations are actually almost $642,000 less than what the department has requested.

– Yesterday morning the New Jersey Local Finance Board, part of the state Department of Community Affairs, voted to waive the city of Camden’s 3 percent cap on taxes. This will let Camden raise municipal property taxes to 23 percent.

The expected $4 million in funds that will be added to the city’s budget as a result will go to the rehiring of approximately 30 to 35 police officers and 8 to 10 firefighters, according to city spokesman Robert Corrales.

On January 18th, 168 police officers and 67 firefighters were let go. This left Camden, one of the country’s most crime filled cities, with only 200 officers.
This will be the first tax hike for Camden taxpayers in 10 years. Mayor Dana Redd “has been working nonstop to find solutions,” Corrales said.
“We’re trying to be fiscally responsible and wean ourselves off state aid,” he said. “The state aid isn’t always going to be there.”

Chief of Staff for the Mayor, Novella Starks Hinson, said the city is exploring all options to expand the budget, including combining services, such as IT departments and recreation, with the school district.

– In 2008, Maryland began imposing a two year law that taxed millionaires at 6.25%. The law will expire on December 31st, and Governor Martin O’Malley has no intention of re-instating it. The ‘millionaire’s tax’ along with other measures, was created to help decrease the state’s $1.7 billion budget gap. Spending cuts will combat the absence of the tax in 2011.

Maryland is not the only state to have levied higher taxes on high earners recently. Hawaii, New York, Wisconsin, and New Jersey all raised taxes in a similar fashion in 2009. Oregon did in 2010, and Washington tried to, but the law wasn’t passed. With the exception of Wisconsin, all the taxes are temporary.

When Gov. O’Malley presented the tax in 2007, he pointed out that the tax would only affect 3.7% of the state’s households. It was part of a broader overhaul that actually cut income taxes for most residents. According to the state’s Comptroller’s Office, $120 million has been raised through this tax. And although this tax won’t be renewed, there will still be a 5.5% tax on income greater than $500,000.